The Church of England investment arm has been in the news of late amid concerns that the church may have inadvertently assisted in the flotation of payday loan company Wonga.com. It turns out that the Church of England invested directly into a company which then floated the payday loan operation which seems to be slightly at odds with the church’s ethical stance.
Many people may be unaware that the Church Commission, which manages investments for the Church of England, had assets valued at 5.5 billion (end of 2012) which include a variety of stock market investments and property assets.
Church Commission property investments
The last valuation of the church’s property assets occurred in 2010 putting a value of £1.6 billion on these assets. These assets include commercial, residential, land to rent, strategic land and investment in global property markets. So while the Church of England continues to take the moral high ground with regards to Wonga.com it remains one of the largest investors in the UK property market.
While nobody is suggesting that residential property rents are forcing individuals from their properties, the fact is that the UK economy is struggling and no doubt tenants of Church Commission properties will also be in financial difficulties. It would be interesting to see the figures with regards to evictions and outstanding rent in relation to Church Commission residential properties but this does not appear to be readily available.
Squeezing the property market higher
The very fact that the Church Commission invested in property as a means of maximising income and capital values in the long-term, means that the church is benefiting from the ongoing economic recovery. This recovery has come at a price for many people across the UK who are now struggling to cover their rent, utility bills and seeing a major squeeze on household income.
Quote from PropertyForum.com : “As London echoes to the sound of ceremonial gun salutes, impromptu singing on the streets and the hustle and bustle of crowds outside Buckingham Palace, many people are asking where the new royal baby will live.”
Investments to the tune of £1.6 billion in the UK property market is also helping to take up slack in the market which will inevitably squeeze prices higher with less available properties on the market. It is also common knowledge that the Church of England still maintains ownership of the Metro shopping centre in Gateshead, one of the largest in Europe, receiving 10% net rental income from a management arrangement with a third party.
While the Church of England has a wholly ethical investment policy this is very difficult to manage due to the complex nature of the investment arena. Indeed from an ethical standpoint is it right to put pressure upon tenants of church property who are unable to pay their rents or is it the right choice to give them some leeway and reduce church income going forward – and potentially the value of the property?
It is very difficult to take a clear and concise ethical approach to investment because everywhere you go, whether investment in the property market or the stock market, does have an impact on the lives of everyday people. The Church of England‘s vast commercial property portfolio also ensures it is a major player with retail outlets, hotels, etc and as such ongoing rental increases will be eating into the income of tenants and potentially impacting their standard of living. There is no suggestion that the Church Commission is doing anything wrong or anything against its ethical guidelines but taking the moral high ground with regards to Wonga.com is a very dangerous path to take.